ha! Yeah, they are there to seduce the impulse buyer into a lovely new handset for a bit less per month than the 18 month contract.
Trouble is: I'd wager a large number of people want a new phone after a year or so, and so are gutted when they are stuck with a 2 year old handset. (disclaimer for patrice: I said "a large number", not "patrice" or "everyone")
Also, if you tot up the amount you're handing over in 24 months, you could have bought a handset sim free and called the shots a bit more.